Pound (GBP) firms as trade worries hit other currencies
The pound (GBP) rose against many of its rivals yesterday, as concerns about escalating trade tensons continued to weigh on other currencies more than GBP.
With the UK expected to be relatively unaffected by US tariffs and retaliatory measures, Sterling was able to gain ground.
UK economic data remains in short supply today. As a result, GBP movement may remain tied to wider market trends.
Euro (EUR) rises as USD declines
The euro (EUR) strengthened yesterday, with the single currency enjoying its strong negative correlation with the embattled US dollar (USD).
In addition, a risk-off market mood helped the safer euro attract support.
A number of European Central Bank (ECB) policymakers are due to speak today, including President Christine Lagarde. Any hints that future rate cuts could be at a slower pace may support the common currency.
US dollar (USD) weakens as recession fears simmer
The US dollar stumbled yesterday amid ongoing concerns that the American economy could experience a downturn, due to trade war fears and cuts to federal spending.
The ‘greenback’ faced ongoing pressure as Trump announced higher tariffs on Canada, raising concerns that trade tensions will continue to escalate, although Ontario and Washington eventually walked back on their threats.
Attention now turns to the latest US consumer price index due out this afternoon. If American inflation cooled last month, as expected, the US dollar could face fresh losses.
Canadian dollar (CAD) slumps amid increased US tariffs
The Canadian dollar (CAD) plunged yesterday after Donald Trump doubled tariffs on Canadian steel and aluminium to 50%, while threatening further tariffs on Canadian carmakers.
However, CAD recouped some of these losses as Canada and the US came to an agreement to avoid escalating their trade dispute.
Today we could see the ‘loonie’ fall even further, as the Bank of Canada (BoC) is poised to cut interest rates for the seventh time since it started its easing cycle in June 2024.
Australian dollar (AUD) rangebound amid mixed market mood
The Australian dollar (AUD) was flat overnight, despite market anxiety as Trump’s 25% tariffs on all steel and aluminium imports came into effect. Optimism around a 30-day ceasefire in Ukraine helped to temper the risk-off mood.
New Zealand dollar (NZD) quiet amid tepid risk appetite
The New Zealand dollar (NZD) also traded sideways last night as the uncertain market mood confined the risk-sensitive ‘kiwi’ to a narrow range.
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